The Great Canadian Smartphone Race

The Great Canadian Smartphone Race

Why are Canadians taking to the mobile web faster than their southern neighbors?

September 23, 2013

Canada has the world’s fastest growth rate for smartphone adoption, and boasts the third-highest penetration rate globally. At the end of 2012, smartphone penetration in Canada reached 62% of the total mobile phone population – compared to just over 50% in the US, according to ComScore. What’s more, Canadians are rapid adopters of mobile payments and video. Some 37% of Canadian smartphone users regularly watch video on their mobile devices, while just 2% of US smartphone users do so.

And when Canadians jump on the smartphone bandwagon, they do so in a big way, becoming huge consumers of mobile data. Canadian users generated over 77% more mobile data traffic per subscriber in 2012 than the global average, according to Cisco.

Many industry watchers believe the rapid uptake of smartphones in Canada comes down to cost. The cost of cellular data plans in Canada has fallen significantly since 2007, when the government auctioned off mobile data spectrum to new entrants and spurred competition in the marketplace.

“The Canadian government lit a flame under the big three mobile providers, Rogers, Telus, and Bell, when it opened up the market to new entrants,” says Amit Kaminer, an analyst at Montreal-based telecom research firm The SeaBoard Group. “Prices for mobile data plans came down drastically.”

The price of mobile phone services fell 13% in 2013 in Canada, and will likely continue to fall as competitive carriers like Wind, Mobilicity, Public Mobile, and Videotron introduce new packages.

Elsewhere in the world, such as in Europe and Asia, low-cost plans have driven a surge in smartphone adoption. And higher costs have likely held back growth in the US, where the Verizon and AT&T duopoly controls over 65% of the US mobile market and has little incentive to offer competitive pricing.

But other observers says data plans in Canada cost about the same as in the US, so price alone doesn’t explain Canadians’ fervor for smartphones. In fact, Canadian consumers would be willing to pay even higher prices than they do now to keep their smartphones.

Canadians may simply be more sophisticated technology users than Americans. They are the most active Internet users in the world, and the second biggest consumers of online video after the British, according to ComScore.

“Canadians have always been world leaders in Internet connectivity, and smartphone penetration and extensive mobile use can be seen as a natural extension of that,” says Bernard Lord, president and CEO of the Canadian Wireless Telecommunications Association. He cites the most recent Global Competitiveness Report from the World Economic Forum that ranked Canada ahead of the US in terms of broadband penetration and average Internet speeds.

“Canada’s wireless service providers have invested heavily to ensure network capacity can address demands, making it possible for Canadians to continue to access the content through mobile devices that they've always accessed through the traditional internet,” says Lord.

Many Canadians are also avid technology watchers, and are quick to adopt new services that may have launched earlier in the U.S.

“We still have more customers in the U.S., but the rate of adoption was quicker when we launched in Canada, and we attributed the quick growth to pent-up demand,” says Katie Baynes, a spokesperson for Square. “When we started business in the U.S., we would frequently receive emails, tweets, and messages from Canadians asking when we would be launching there.”

Whether Canadians can keep their lead over Americans in smartphone usage remains to be seen. But one lesson the U.S. wireless industry could learn from its northern neighbors: offer more competitively-priced data plans if you want consumers to ditch their ‘dumb’ phones.

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About Kristi Essick

Kristi Essick has covered technology for the Wall Street Journal and The Industry Standard.